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The Norwegian government has offered to replace a controversial Utøya memorial in an effort to appease local residents.

The ‘Memory Wound' memorial to commemorate the massacre of 69 people, mostly teenagers, on the island in 2011 has been fraught with controversy for years.

Designed by Swedish conceptual artist Jonas Dahlberg, the memorial is a “permanent scar” that would see the tip of Sørbråten, the peninsular which juts out into the Tyrifjorden towards Utøya, severed from the lakeside, and the names of the dead then carved on the exposed surface of the new island.

In an apparent turn-around, Local Government Minister Jan Tore Sanner said on Thursday that the government has now offered to scrap Dahlberg's controversial design.

“We want to avoid a long and harrowing trial and have proposed a settlement that includes us abandoning the selected artwork. We have asked the Attorney General to investigate the feasibility of launching settlement negotiations that would entail keeping Sørbråten as the memorial location but would involve all concerned parties in the decision to find another memorial instead of ‘Memory Wound',” Sanner said.

The neighbours' lawyer, Harald Stabell, has argued that the memorial would damage the mental health of those locals who suffered traumatic stress after participating in the rescue operations after convicted terrorist Anders Behring Breivik's shooting spree on the island.

The neighbours have stated that they are not opposed to a memorial within Hole Municipality, which encompasses Utøya, but they cannot accept having it placed within the local community that is home to so many people who were involved in the rescue process.

Stabell told broadcaster NRK last week that he would move forward with the lawsuit if the government does not move the location of the memorial, regardless of its design.

“There has been a meeting between two lawyers from the Attorney General's office and myself, in which they, on behalf of the government, put forward a settlement proposal that was rejected by my clients,” Stabell said.